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CMS to sweeten Medicare Advantage deal

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The Centers for Medicare & Medicaid Services (CMS) says it is increasing its estimate of the projected change in Medicare Advantage plan per-person costs 0.4 percent for 2015.

In February, CMS had proposed using a 1.9 percent decrease in projected per-person costs in the official plan bidding documents.

CMS actuaries are now expecting the actual cost of care for the plan enrollees to fall 3.4 percent. Just a few weeks ago, the actuaries were expecting costs to fall only 1.9 percent, CMS Director Jonathan Blum said today during a conference call with reporters.

But CMS scraped up part of the 2.5-percentage-point increase in the actual bidding benchmark by changing the way it calibrates one Medicare Advantage risk management program and slowing the phase-in of another risk management program that could have decreased the benchmark, Blum said.

Blum noted that the benchmark represents an average for all plans in the Medicare Advantage program, in all geographic areas and at all quality-based reimbursement rate levels.

The projected per-capita cost change benchmark is just one component of a Medicare Advantage plan rate proposal, Blum added.

America’s Health Insurance Plans (AHIP) analyzed the figures CMS included in its original 2015 Medicare Advantage program proposal and said it believed the overall proposed benchmark decrease was really 5.9 percent, not 1.9 percent.

At press time, AHIP had not reacted to the CMS announcement about the 0.4 percent benchmark increase or weighed in on what insurers think the benchmark change really is.

The original CMS 2015 program proposal included a cap on Medicare Advantage plan agent and broker sales and referral compensation.

At press time, CMS had not said anything about producer compensation.

CMS officials said they would post detailed documents about the 2015 program later today. 

The Medicare Advantage program gives insurers a chance to sell plans that serve as an alternative to the traditional Medicare Advantage program.

Medicare Advantage program rules do not have a direct effect on the ordinary commercial health insurance market, but, because the program makes up such a large part of the health care market, it has an indirect effect on the cost of care and the cost of commercial health insurance.

In some cases, carriers with a large Medicare Advantage program may try to make up for a reduction in Medicare Advantage plan underwriting margins by raising commercial plan rates and cutting commercial plan benefits.

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